Stock / Symbol: [private_monthly]Apache / APA[/private_monthly]
Price at trade post: $124.58
Option Strategy: diagonal call spread
Max Risk: $737
Max Reward: $457 or 62% by Feb 2011 expiration
Profit Range: $122 - $148
Max Reward Price: $130 at Feb 2011 expiration
Reasoning: [private_monthly]Apache[/private_monthly] has very strong fundamentals just seems to keep wanting to go higher. This trade can yield us a very healthy gain if the stock closes at or above $130 by February expiration. If it closes under $130 by Feb 18th, we'll have taken in an uncalled return of 21% and will then look to sell March calls against the position. We also like that our break even on this trade is below its current price.
Trade Details:
[private_monthly]
Buy 1 APA Jul11 125 Call
Sell -1 APA Feb11 130 Call
for a net debit of $7.37 per contract
Requirements:
Cost/Proceeds $737.00
Option Requirement $0.00
Total Requirements $737.00
Estimated Commission $12.95
[/private_monthly]
Chart:
[private_monthly]
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